HC Deb 18 June 1986 vol 99 cc1053-8 3.54 pm
The Secretary of State for Social Services (Mr. Norman Fowler)

With permission, I should like to make a statement about social security benefits and students.

In January the Government published proposals which were a first step to channelling support for students more through the educational maintenance system than the social security system. I referred these proposals to the Social Security Advisory Committee and I am today publishing the committee's report together with the Government's response to it. I am also laying before the House amended regulations which take account of its views and those of the local authority associations and others expressed during the consultation period.

It remains the Government's view that in the long term it cannot be sensible that students should be subject to two separate but intertwined systems of support. It cannot be satisfactory to have students permanently dependent upon a system which is primarily designed for those who, for various reasons, cannot work rather than for those who have withdrawn voluntarily from the labour market to study. The vast majority of comments to the Social Security Advisory Committee supported the principle of rationalising student support. But at the same time three main concerns were expressed.

First, there was concern that the major change proposed to housing benefit, whereby the accommodation element in the grant would be taken fully into account when assessing housing benefit entitlement, would cause a wide range of losses. The Social Security Advisory Committee shared that concern while at the same time recognising the case in principle for the change. Although there is no doubt that the present rules treat students more favourably than other claimants, the Government are prepared to withdraw that proposal.

Second, there was concern that in relation to the withdrawal of housing benefit for accommodation left unoccupied in the summer vacation some students would not have time to change existing plans and commitments. We recognise their concern and, therefore, this measure will not take effect until the summer of 1987, as we accept that students who have already entered into rent commitments for this summer could face difficulties.

Third, there was concern about the position of students without an award who have begun their studies on the assumption that they would continue to draw benefit at the current level. We accept that we should protect the most vulnerable of these—existing students living away from their parents' homes. Those students will be treated as now for housing benefit—in respect of privat rented accommodation in term time and the short vacations— up to 1 April 1988, or when their present course ends.

The remainder of the Government's proposals are largely unchanged. We shall remove entitlement to unemployment benefit and supplementary benefit in the short vacations when students are already provided for through the grant. We shall simplify housing benefit administration by averaging grant income for the whole of the grant-assisted period. Students in halls of residence will in future be able to claim housing benefit only during the long vacation, for which there is no provision in the grant.

Our proposal to make a £36 additional increase in the grant still stands and is an important step to the long-term aim of shifting student support away from the social security system. Nevertheless, the Government recognise that there are important issues to be discussed before making further progress towards that aim. This raises a question of a wider review of student support and that will be dealt with by my right hon. Friend the Secretary of State for Education and Science in his statement shortly.

Our other proposals have been widely welcomed and will go forward. We shall extend help under the students' dependants' hardship scheme to cover the full year for two-parent families, as well as single parents. We shall disregard for housing benefit those parts of the grant which cover books and travelling expenses. That change will now take effect for the academic year 1987–88. We shall provide a firm legal basis for treating students' income from parental covenants so that it does not affect their claims to benefit during the summer vacation.

The Government's long-term aim of removing students from the benefit system has been widely welcomed and accepted in principle. It cannot be right that generations of students should be encouraged to depend on social security. We set out our proposals five months ago and we have responded carefully to the comments made upon them. I believe that the proposals I have described today represent sensible steps towards rationalising provision for students, and reducing their dependence on benefits.

Mr. Michael Meacher (Oldham, West)

Is the Secretary of State aware that, although we welcome the fact that students will at least now not be made homeless by housing benefit cuts this summer vacation, he is still proceeding with substantial benefit cuts for students which will not be adequately compensated for by the grant system? Is the right hon. Gentleman further aware that his proposals will cause severe losses to up to 250,000 students who are caught in the crossfire between the DHSS and the Department of Education and Science?

Is the right hon. Gentleman also aware that the two-month delay in making this statement, since he had the damning SSAC report at the end of March, has accentuated the difficulties particularly for mature students and for those from poor backgrounds, because several housing benefit offices, such as those at Reading, Aberdeen and Dundee, have already been refusing to allow students to sign on? Will he therefore issue immediate instructions to all DHSS offices to meet students entitlements in full this summer?

Is the Secretary of State aware that, while the Opposition understand the principle that students should be supported by grants and not by means of the social security budget, we do not accept that benefits should be cut sharply before an adequate alternative grant system is formulated and implemented? The mere promise of a review of grant in the light of the aborting of the previous one is a wholly insufficient substitute.

Will the Secretary of State acknowledge that student entitlement to social security benefit has been growing solely because of the diminishing value of the grant, which has fallen by 20 per cent. in real terms since 1979? Is he aware that what is proposed today is scarcely a genuine review when students are being squeezed by the DHSS while proper compensation from the DES slips further into the future?

How does the Secretary of State justify failing to improve on the original and miserly £36 compensation a year for loss of housing benefit during the short vacations? Why does he not admit that he is looking to parents to met at least one third of the losses?

Is the right hon. Gentleman aware that his continued insistence on removing entitlement to unemployment benefit and supplementary benefit at Christmas and Easter is tantamount to saying that students should not be available to work in the short vacations? The falling real value of the student grant means that they need to find work or to claim benefit to get by.

This statement means that, contrary to the clear prescription of their own advisers and contrary to natural justice, the Government still intend to take money away from students on the basis of a vague promise of some future IOU. That is wrong-headed and unjust. The Secretary of State should withdraw all these benefit cuts until the grant review is completed.

Mr. Fowler

I do not accept what the hon. Gentleman has just said. He says that he understands the principle of seeking to reduce students' reliance upon the social security system. I hope that he supports that principle because that was the position of the majority who gave evidence to the Advisory Committee. There will be an opportunity to debate the regulations when they come forward.

The hon. Gentleman is not right in his generalisation about losses. Indeed, 140,000 students will gain from our proposals. As a result of our concessions, many fewer housing benefit losses will take place. Students are not normally affected by losses from more than one source.

Mr. Dennis Skinner (Bolsover)

How many losses?

Mr. Fowler

As losses are not cumulative, it is not possible to provide that information.

Mr. Skinner

How many?

Mr. Fowler

If the hon. Gentleman understood the means whereby — [Interruption.] It is not possible to work out exactly what the losses are and the number of students who will be losing because the losses are not cumulative.

We are seeking to return to a position where help for students is channelled through the educational maintenance system. That must be right. Only a few years ago no students claimed from the social security system and now most do, at an annual cost approaching £120 million. Claims by students for housing benefit have come literally only in the past three or four years. It has not been the housing benefit system that has created that demand.

The hon. Member for Oldham, West (Mr. Meacher) has failed to understand the significant concessions that we are making. For example, there is the concession of deferring the removal of housing benefit for unoccupied accommodation in the long vacation. Another concession is the decision not to proceed with the new method of calculating housing benefit. These are substantial concessions that have been made in the light of the evidence that has been given to us. We stand by the principle that it cannot be right to have two systems running side by side. It must be right to have more help for students channelled through the educational maintenance system.

Several Hon. Members


Mr. Speaker

Order. The House will have heard the Secretary of State say that there will be a debate on this matter. As there are two more statements to follow on broadly the same issue, I shall limit questions on this statement until 4.15 pm, and then we must move on.

Mr. Robert McCrindle (Brentwood and Ongar)

Having asked my right hon. Friend to slow down the transfer from reliance on housing benefit, may I congratulate him on making this statement to the House? Will he confirm that the principle of providing support for students, principally through the student grant system, is still very much an aim of the Government? Will he confirm also, sitting as he is next to my right hon. Friend the Secretary of State for Education and Science, that as we move forward there will be meaningful discussions between the two of them so that a better timetable for achieving our objective can emerge?

Mr. Fowler

I confirm what my hon. Friend says. There will be discussions between my right hon. Friend and I. I think that it is right to have the longer review of the overall position which bodies such as the Advisory Committee want. My hon. Friend is right to suggest that there are three significant concessions in the statement, which will appear in the regulations that will be placed before the House, which I believe will be widely welcomed by the student population and the Advisory Committee. At the same time, we have adhered to the principle of seeking to have more help coming through the educational maintenance system than through benefit, which I believe is in the public interest as well.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Why has it taken so long for the Secretary of State to make this statement? Is he aware that university vacations at St. Andrew's, Cambridge and Bangor have already started? What does he say about the Advisory Committee's comment that he has switched some of the specifically targeted benefit savings to indiscriminate flat rate subsidies? That seems to move against all the principles that he has adopted in his other social security reviews. Is he not putting the cart before the horse by pre-empting the review that the Secretary of State for Education and Science will be announcing later?

Mr. Fowler

I do not think that that is fair. We said in the Green Paper on social security last year, and in the White Paper, that it was our intention to move in the direction that I have outlined. That has been supported. We are taking only a first step, however. We have made significant concessions and the overall savings position has been very much affected by that. We have sought in the concessions that we are making to guard against students being affected in a sudden way. Students will enjoy a significant concession during the coming summer vacation.

Mr. J. F. Pawsey (Rugby and Kenilworth)

Is my right hon. Friend aware that his statement should be welcomed widely in the House and outside? Does he agree with me that it should be viewed against the most generous system of student support in the western world? Will he confirm that the concessions that he has announced will cost about £20 million? Will he further confirm that both housing benefit and supplementary benefit will be available to students for the long vacations?

Mr. Fowler

Help will be available in long vacations. As my hon. Friend suggests, it is right that that should be emphasised. It seems not to be understood, even by some of those who have been lobbying on these matters over the past month, that the proposals are confined to short vacations and not to long ones. I must remind the House that we are spending £5 million in housing benefit that goes to halls of residence. The administration costs of paying that £5 million is £3 million a year. [Interruption.] It seems absurd that sensible people like the hon. Member for Birkenhead (Mr. Field) should be defending such a system.

Mr. Frank Field (Birkenhead)

Does the Secretary of State really expect the House to believe that he got his statement through the Treasury without detailing the number of students gaining and the number losing? Will he come clean and tell the House the number of students who will still lose under these proposals? As he is so caught up with cumulative and non-cumulative totals, I am sure that the House would be happy with a non-cumulative total.

Mr. Fowler

I cannot give that figure for the reasons that I have stated. What is certain is that 140,000 students will gain from the full £36 we are making available. There are obviously two main sources of loss—unemployment benefit in short vacations, and housing benefit on unoccupied accommodation in the long vacation. The hon. Gentleman will know, for example, that we are postponing the introduction of that until 1987. It is not possible to give the exact figure that the hon. Gentleman requires.

Mrs. Elaine Kellett-Bowman (Lancaster)

Does my right hon. Friend accept that I am glad that he has listened to the anxiety of students on covenants who are unfairly affected vis-a-vis those on sponsorship and those on full grants, and has taken steps to remedy that? However, I am still worried about those who can get accommodation only by taking an annual lease. That situation will not disappear in the summer of next year. My right hon. Friend has given himself leeway to think again, and I hope that he will do so.

Mr. Fowler

I hear what my hon. Friend says. I think that she will recognise that postponing the implementation of the proposal for a year enables the position to be examined from the point of view of the student and the landlord. Clearly we shall keep the position under review.

On the matter of the restoration of policy on the treatment of parental covenants, that decision has been widely welcomed. We shall put that beyond doubt in the regulations.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

In relation to the revised proposals announced by the Secretary of State today, can he tell us what the total saving to the DHSS budget will be in the first full financial year?

Mr. Fowler

In 1986–87, which is this financial year, the overall saving will be about £8.5 million. In 1987–88, it will be £16 million.

Mr. Michael Latham (Ruthland and Melton)

I thank my right hon. Friend for listening to the expressions of concern of many of his supporters on this matter. Will he give an assurance that it is not the Government's intention that qualified students should be denied places in higher education because they or their parents cannot afford it?

Mr. Fowler

I can readily give that assurance on behalf of the Government.

Mr. Peter Hardy (Wentworth)

Is the Secretary of State aware that his statement seems to be an exercise of unwitting self-condemnation? Does he accept that in some areas there is a serious regionally intense problem? Does he accept that in areas of high unemployment, the Government's underlying assumption that students can work in the long vacation is simply not tenable because of the job starvation in those areas? Does he also accept that the problems faced by students in those area are particularly acute and seem to have escaped his attention in the statement today?

Mr. Fowler

We are not making proposals on the long vacation. It seems that the hon. Gentleman has asked a question based on an entire misunderstanding of the position.

Mr. Nigel Forman (Carshalton and Wallington)

Is my right hon. Friend aware that, in so far as I understand the statement, I welcome the alleviations in it? For the benefit of myself and the House, will he put in the Library a simplified and clarified version of what he has said in order to give students and their parents the benefit of clear information?

Mr. Fowler

I accept that. I shall certainly endeavour to follow up my hon. Friend's request.

Mr. Tam Dalyell (Linlithgow)

How much cash has the right hon. Gentleman winkled out of the Treasury for extending the students' dependants' hardship scheme?

Mr. Fowler

I cannot give that figure off hand. I should be glad of the hon. Gentleman's support on this, if I interpret it as support. Clearly that is one area where money will be paid.

Mr. Dalyell

How much?

Mr. Fowler

It is not a substantial amount. What is a substantial amount is the concession that we are making on the method of calculating housing benefit where the savings are £20 million less than would otherwise be the case.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

What peculiar ability is it by which the Secretary of State can estimate projected savings for the Treasury but cannot estimate the projected number of affected students?

Mr. Fowler

For the very good reason that there is a series of proposals which may affect individual students but which are not cumulative. Unless one knows the individual position of each student, it is impossible to give the kind of information that the hon. Gentleman wants.